Ministry Of Economy And Sustainable

Development Of Georgia

What Georgia offers

A politically stable investment

destination

Corruption - free and

transparent business

environment

Free Trade Agreements with

2.3 bln market

No corporate profit tax on

reinvested profit

Skilled and competitively

priced labor force

Stable and growing financial

sector

Business Friendly Environment

---

Georgia is one of the leading countries in the

world in terms of starting a business, dealing with

bureaucracy and the number of procedures required to launch and operate an enterprise

Doing Business

Up from #112 in 2005

N 16

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Economic Freedom

Majority of Georgia’s reforms are oriented on the development of free,

open and transparent, private-sector driven

market economy

Up from #99 in 2005

N 13

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Corruption Perception

Alongside recognitions as the top reformer in the

world, Georgia is the leader in the wider region in terms of fighting with corruption. Corruption index is lower than in number of EU states.

Up from #130 in 2005

N 44

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Security index

Georgia is named as one of the safest place in the world according to the Security index by the

World Economic Forum

World

N 16

Source: Geostat, MOF

Economic Structure and Trends

5.8%

9.6%9.4%

12.6%

2.4%

-3.7%

6.2%7.2%

6.4%

3.4%

4.6%

2.9% 2.5%

4.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017F

Real GDP Growth Rate, y-o-y (%)

Source: Geostat, MOF

1,4841,764

2,315

2,921

2,4552,623

3,2313,523 3,600 3,676 3,743 3853

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Growing GDP per capita (USD)

Agriculture, forestry and fishing

9.3%

Industry17.1%

Construction8.3%

Trade; Repair of goods16.3%

Hotels and restaurants

2.8%

Transport and Communication

10.1%

Real estate, renting and business activities

6.6%

Public administration9.1%

Education4.9%

Health and social work5.8%

Other sectors9.7%

Source: Geostat, MOF, World Bank

Diversified nominal GDP structure in 2016

Source: Geostat, MOF

40.0%

32.2%25.5%

31.2%

41.0% 42.4%36.5% 34.9% 34.7% 35.5%

41.5%

26.8%21.1%

16.8%23.5%

31.7% 33.6%28.8% 27.6% 27.2% 26.8%

32.6%

0%

20%

40%

60%

80%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Public Debt to Nominal GDP (%) External Public Debt to Nominal GDP (%)

Favorable public debt situation

Foreign Direct Investment

422 404

300 298261

236198.5

150116

0

100

200

300

400

500

Georgia Spain Greece Poland Russia Romania Macedonia Turkey Armenia

Source: Geostat, The Heritage Foundation 2016

FDI per capita (current USD) 2016

Transports and communications,

39.0

Energy sector, 12.0

Construction, 10.0

Financial sector, 8.0

Manufacturing, 7.0

Hotels and restaurants, 7.0

Real estate, 4.0

Other , 12.0

FDI Breakdown by sectors 2016 (%)

Georgia has signed Bilateral Investment Treaties (BIT’s)

with 33 countries and is member of ICSID Convention since

1992

FDI amounted to USD 1.6 billion in 2016. Preliminary FDI

number of I quarter 2017 is USD 403 million, which is 4%

increase compared to same period of last year.

FDI by years

2015

1564

658814

1117

912 942

1758

1565 1566

19.8%

12.2%

6.1%7.0% 7.7%

5.8% 5.8%

10.6% 11.2%10.9%

0%

5%

10%

15%

20%

25%

0

500

1000

1500

2000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

FDI FDI as % of Nominal GDP

No Corporate Profit tax on retained profit: From 2017

profit tax is deductible only in case of profit distribution9th Least Tax Burden Country in the World

Property Tax -0%, 5%, 12%

Corporate Profit Tax – 15%

Personal Income Tax – 20%

VAT – 18% Dividend – 5%

Foreign-source income of

individuals fully exempted

No wealth tax No payroll tax or

social contribution

Only 6 flat taxes today

Double Taxation avoidance with

54 countries

Georgia has young, skilled & competitively priced labor force

• All ILO core conventions are ratified by Georgia

• Around 60% of young population and 40% of

overall population know English

• According to Heritage Foundation, Georgia

ranks 25th globally on Labor Freedom Index

Average monthly salary in 2016 Unemployment Rate

Flexible Labor CodeYoung labor

11.8%

of unemployed population

are in 20-40 age category 54%

415 USD

Regional Hub for Doing Business

Very simple and service oriented customs policy and

administration

80% of good free from import tariff

No quantitative restrictions or tariff barriers

Source: Geostat.ge; * - preliminary data

Most Favored Nation (MFN) since 2000

China - FTA

EFTA - FTA

Turkey - FTA

CIS - FTA

EU - DCFTA

US, Canada, Japan - GSPA

BUSINESS PROCESS

OUTSOURCINGMANUFACTURING

HOSPITALITY & REAL ESTATE

ENERGY

REGIONAL LOGISTICS CORRIDOR

22.8

4.4

5.4 5.6 5.96.3

2010 2011 2012 2013 2014 2015 2016

Source: Georgian National Tourism Administration

Hospitality & Real Estate

Number of international tourists’ arrivals is expected to grow by 8-10%/annual during the next 2 yearsSource: Colliers international

“SUN-BEACH” RESORTS WINTER SKI RESORTS FOUR SEASON RESORTS MEDICAL & WELLNESS

RESORTSGAMBLING

Top Countries by International Arrivals in 2015

Ukraine

3% 16%20%

Azerbaijan

23%

14%

24%Turkey

Armenia

Russia Other

Manufacturing Sector

Growing regional market and various import

substitution opportunities

Average monthly salary in manufacturing

industry amounts to USD 350 (2016)

Free Trade Agreements with 2.3 billion market -

EU, Turkey, China, EFTA and CIS countries

Standard cost for 1 kWh is ~6 USD cents for 30-

110 kV high voltage electricity

4 Free Industrial Zones (FIZ) - In FIZ,

businesses are exempt from all taxes except

Personal Income Tax (20%)

Average monthly salary in 2016 for BPO sector was 340 USD

Time proximity and cultural similarities put Georgia in a great position to

serve regional target markets

Vast majority of younger population speaks fluent English and

additionally Georgia has language skills to serve German and Russian

speaking countries

74 higher educational institutions and over 120 professional education

centers ensure constant flow of high quality professionals every year

Utilities costs (including internet) are one of the lowest in the wide region,

approximately 2.5 USD per sq. m.

No social security tax; the only tax payable based on salary is Personal

Income Tax (flat 20%)

Newly established investor companies include Arvato Bertelsmann and

Base4

Business process outsourcing (BPO)

Hydro Power

Among top countries in terms of water resources per

capita (only 20% utilized)

78% of total electricity is generated from HPPs

300 rivers for electricity generation

Generation and Export activities are exempted from VAT

~100 HPP projects open for investors

Energy Sector

WIND Solar

Wind potential of Georgia is estimated up to 1500 MW

High generation during winter

Share of wind power in total generation will reach 10% by year 2025

Big potential for solar energy development

During the year in most regions there are 250-280 sunny days and the annual

average amount of sunshine hours is over 2000

Other Renewable Sources

Why Georgia

Leveraging its location, Georgia’s transport economy can benefit from large

addressable transit flows, growing economies and landlocked resources

Ports are cost-competitive vs. alternative routes

Georgia’s existing transport economy is transit based

Upgrading regional transport infrastructure

Sea Ports Road & Railway International Airports

Poti Sea Port (APM Terminals)

Batumi Sea Port (BIH)

Kulevi Terminal (SOCAR)

Supsa Terminal (BP)

Georgian RailwayTotal Length: 2,083.9 km

RoadTotal Length: 20,329 km

Tbilisi International Airport (TAV)

Batumi International Airport (TAV)

Kutaisi International Airport (UAG)

OVERVIEW OF GEORGIA’S LOGISTICS SECTOR

Regional Logistics Corridor – Ongoing projects

Port • New Deep Sea Port – Anaklia

Railway• Baku-Tbilisi-Kars Railway Project• Georgian Railway Modernization

Project• Tbilisi Railway Bypass

Tbilisi International Airport• International Cargo terminal• New Arrival Terminal

Kutaisi International Airport• Apron extension• Cargo Terminal

Road • East-west highway • Rehabilitation of existing

infrastructure

• Location: Tbilisi, GeorgiaArea Size: 52.7 haOverall investment: USD 80 million

• Location: Kutaisi, GeorgiaArea Size: 46 haOverall investment: USD 73 million

Investment opportunities in Logistic centers

Alternative route through

Georgia takes 7-9 days from

China to Europe instead of

45 days of traditional route

Investment Proposal – Logistic centers development in Georgia

First capable Logistics Hub for East Georgiaas well as South Caucasus Region

Direct access to Baku-Tbilisi-Kars railway line

Implementation of a Rail-Road Container Terminal (about 8 ha)

Area size: about 53 ha

Overall investment: USD 80 million

Start of operation in 2021

Logistics Centre Tbilisi

First capable Logistics Hub for West Georgia

Excellent location adjacent to Kutaisi International Airport

Optional further implementation of a Rail-Road Container Terminal (about 2.5 ha)

Area size: about 46 ha

Overall investment: USD 73 million

Start of operation in 2020

Logistics Centre Kutaisi

Access To Finance

State support program

10% Interest Rate Co-financing (2 years)

50% Collateral Guarantee (up to 4 years)

Transfer of state property for 1 GEL

(only for manufacturing industry)

Co-financing of Franchising

Fee/Management Contract (hotels)

Co-financing of Technical Assistance

State support program

Access to finance programs:

o Micro grants for prototyping

o Startup Georgia (5% equity; high-

tech; globally scalable projects)

o Matching grant for R&D

commercialization

Physical space in TechPark and

Technical Assistance

Business incubation & acceleration

100% State Fund

Total Assets – USD 3 billion

Investment Options:

PF participation should not exceed 50%

of the total investment

Equity Co-Investment

Senior and Subordinated Loans

20

Multiple international organizations operate in Georgia

under different goals and fields of expertise

International Funding Partners

Access To Finance

Ministry Of Economy And Sustainable

Development Of Georgia

Thank you for your attention